Although I am often asked to speak to recent grads, I have never been asked to speak at any graduations. But if I were, I imagine I would deliver something along the lines of this speech.

Today is part 7. To see the entire speech released so far, click here and read from the bottom up.

Rule 6: Take advantage of your benefits or you’re being kind of dumb.

Don’t like total candor? Sorry, wrong number.

Every company in America that pays you a wage will withhold Social Security taxes. They have to. It’s the law. Theoretically, Social Security is a retirement plan. I hope that works out for you.

As you’ll quickly learn, the Social Security tax you pay each paycheck isn’t actually saved for your retirement, it’s used. Immediately. Shocked? This doesn’t have a thing to do with Democrats or Republicans—this is the U.S. federal government we’re talking about. Bipartisan silliness.

While most of the Social Security tax money you pay goes to current retirees (likely including your grandparents), so far there’s been plenty extra for the feds to spend on things like bridges to nowhere, interest on the national debt, missiles, farm subsidies, and so forth. But way before you retire, Social Security taxes paid by workers in a given year will be far less than the benefits promised to retirees during the same year. Like I said, good luck with your retirement benefit from Social Security.

Many employers offer a 401(k) plan. A 401(k) plan is also retirement plan. But it’s very different than Social Security. With a 401(k) plan, any money saved goes into an account with your name on it. It’s there for your future. If it’s not there, it’s because you took it out, not because of government mismanagement.

Ironically, you must choose to participate in a 401(k) plan. Social Security, that the government make you do (I’ve looked for the opt-out form but can’t find it). The 401(k) plan though; your participation is up to you. Be sure to take advantage of your 401(k) plan. You can end up at retirement with a ton of money if you do. With Social Security, I don’t know. Do you?

[To be continued]

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